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Understanding and Applying Innovation Strategies in the Public Sector

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Understanding and Applying Innovation Strategies in the Public Sector
By Steven Cohen and William Eimicke Graduate
Program in Public Policy and Administration School o
International and Public Aairs
Columbia University
Prepared or Presentation to the !"th Annual #ational Conerence o the American
Society or Public Administration$ %une &'(%uly )$ *''+$ Atlanta Georgia,
I, -n Public .anagement Innovation
0his paper see1s to identify strategies for bringing innovation into public sector organi2ations3 and
develop some ideas about ho and hen to deploy these strategies# 4e discuss management innovation
conceptually3 and then discuss some specific techni5ues of management innovation no being
e6perimented ithin the public sector# 0hese techni5ues include: Strategic planning3 reengineering3 total
5uality management3 benchmar1ing3 team management and privati2ation#
0his is not an e6haustive list of innovation techni5ues but rather a set of the most common innovation
techni5ues no used in the public sector# 4hile e ill address each techni5ue separately3 in the real
orld they tend to be used in combination and in no ay should be seen as mutually e6clusive# In fact3 a
ma7or assumption of this paper is that despite the presence of consultants and others ho advocate one
techni5ue as the 8right8 one to follo3 effective management innovation re5uires a blending and
tailoring of a variety of innovation techni5ues to an organi2ation9s uni5ue culture and environment#
II, /he Concept o Public Sector .anagement Innovation
:or us3 public sector management innovation can be best defined as the development of ne policy
designs and ne standard operating procedures by public organi2ations to address public policy
problems# It is important to note that e are dealing ith both the design and the management of
policies and programs# ;ureaucracy as created to provide stable3 to use <aufman9s classic formulation3
preformed decisions3 to specific relatively stable phenomena and stimuli# 0hese standard operating
procedures ere to be long=standing and unchanging# As e enter the &%st century e see our society
and economy rapidly changing in response to ne technologies that have facilitated greater e6change
and economic and social interdependency# 0his accelerated rate of change has challenged the traditional
bureaucratic form of organi2ation to develop ne methods for rapidly modifying organi2ational
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Understanding and Applying Innovation Strategies in the Public Sector
strategies and the S>Ps designed to implement those strategies# Public sector organi2ations are being
challenged to learn to embrace constant change#
Studies of successful public management innovation have discussed the nature of change processes in
the public sector# >livia ?olden $%!!*' studied innovation in public sector human service organi2ations
and 8the implications of innovation by groping along#8 ?olden studied the inners of the %!+" :ord
:oundation Aards program for innovation in public management and tests the use of to models of
innovation in the public sector:
0@A P>BICC PBADDID? .>DAB: 0he emphasis in this model is on innovation through creative
policy design# In this formulation3 innovation is the tas1 performed by policy analysts hile line
bureaucrats oppose innovation as they defend their traditional standard operating procedures#
0@A ?E>PID? AB>D? .>DAB: 0he emphasis in this model is on field=level e6perimentation ith
ne ideas# According to ?olden:
84e cannot 1no ahead of time hat the results of our ideas ill be3 because the comple6ities of the
real orld cannot be anticipated and because ideas divorced from rich operational e6perience are so
general that they are li1ely to be systematically rong# ;ecause e cannot 1no the results of our ideas3
e need to try them out in action and learn from e6perienceF based on that learning e may need to
modify not only our actions but also the policy idea and the ordinal ob7ectives#8 $p# &&"'#
;ryna Sanger and .artin Bevin build on ?olden9s analysis in their study of more than &, successful
innovations# 0hey conclude that public management innovation is rarely characteri2ed by revolutionary
brea1throughs# It typically involves rearranging old practices in ne ays# Eational analysis of options
before implementation seems to be less useful in organi2ational learning than evaluations of programs
already underay#
;oth of these studies indicate that innovative programs and more effective program outcomes seem to be
a function of a spirit of e6perimentation and a illingness to rapidly adopt and discard practices in the
face of evidence about the effectiveness of those practices# 4hile these studies do not distinguish the
design of organi2ational routines from the design of programs and policies3 e believe that their finding
is e5ually applicable to both#
0he supposed failure of various organi2ational reform efforts is fre5uently a result of attempts to 5uic1ly
and uniformly apply an organi2ational reform methodology throughout an organi2ation# Eather than
seeing these methods as instruments of incremental organi2ational reform3 senior management and their
high=priced consultants see these ideas as all encompassing organi2ational ideologies# 0hey are over=
sold and misapplied and often fail for those reasons#
Successful innovation is often incremental and small scale because the factors conditioning the success
of innovative practices vary according to the organi2ation9s internal capacity3 e6ternal environment and
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Understanding and Applying Innovation Strategies in the Public Sector
goals or mission# Aach organi2ation is different and faces varied situations at particular points in time#
0he techni5ues re5uired to promote organi2ational innovation must therefore be situationally
determined# :urthermore3 the stability of the organi2ation9s environment changes over time3 re5uiring
varied degrees of innovation# :inally3 the internal social structure and capacity of an organi2ation to
support and carry out changed standard operating procedures ill also vary# In other ords: 8one si2e
does not fit all8#
In our on efforts to adapt 0G. to specific government situations e developed a pro0ect(oriented
approach to 0G. $Cohen and Aimic1e: %!!)' # It represents an e6plicit recognition that the specific
shape that 0G. should ta1e ill vary in each and every or1 situation# 0he general principles of 0G.
could be taught in to or three hours3 but the actual application ould evolve over time in individual
organi2ational units#
>ur 0G. or1 taught us several other things about bringing innovative practices into organi2ations#
:irst3 0G. alone3 as not a sufficient approach to ma1ing organi2ations agile3 and effective in rapidly
changing conditions# If the organi2ation9s overall strategy as faulty3 or its basic agency=ide systems
ere in massive disrepair== for e6ample3 a personnel system that prevented hiring and retaining 5uality
staff== 0G. ould have the same effect as rearranging dec1 chairs on the 0itanic# 0hrough 0G. e
might have designed an effective practice for posting 7obs or providing promotional opportunities3 but if
no one gets hired or promoted because the overall system is flaed3 our nely designed processes ill
have no real impact on the organi2ation9s performance# An e6ample of the type of system failure e are
describing might be a hiring process ith so many approval steps that e6cellent candidates attracted
through a nely redesigned posting and advertising process ta1e 7obs ith other organi2ations because
of delays in getting hired#
>ur 0G. e6periences started us thin1ing about ho and hen to utili2e other reform strategies:
Under hat conditions is our imagination dry and our need to benchmar1 other organi2ational practices
acuteH
4hen should e accept the high organi2ational cost of top=don3 large=scale system reengineeringH
4hen should e substitute a contractor9s or1 for our onH
4hen has the organi2ation9s environment changed sufficiently to arrant a revision of the organi2ation9s
mission3 focus and strategyH
0o hat degree should team processes replace individual assignmentsH
0hese 5uestions led us to develop an overall frameor1 for management innovation techni5ues that
delineates their characteristics as techni5ues of change and assesses their utility in specific situations#
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Understanding and Applying Innovation Strategies in the Public Sector
III, What is the Purpose o .anagement Innovation1 What Are We /rying /o Change2
0he first issue e face is: 4hat aspect of the organi2ation are e trying to changeH 0he anser to this
5uestion can lead to the use of a particular innovation techni5ue3 or a se5uence of techni5ues#
0he first step in addressing this 5uestion is to identify the potential arenas of organi2ational change# In
our vie there are three arenas3 each calling for different organi2ational change techni5ues:
A6ternal: 0he arena that comprises the organi2ation9s environment# Issues addressed here include the
organi2ation9s mission3 resource base3 mar1et niche3 and political support/opposition#
.acro=Internal: 0he arena of organi2ational behavior dealing ith large=scale3 organi2ation=ide
systems and infrastructure that supports the activities of individual organi2ational units# 0his ill
include the organi2ation9s budget3 purchasing3 personnel3 information3 security3 and communication
systems as ell as other similar support systems and structures#
.icro=Internal: 0he arena of organi2ational behavior that ta1es place ithin individual organi2ational
units as standard operating procedures are developed3 implemented and analy2ed#
An organi2ation can have needs in all three arenas3 and every techni5ue discussed can have some utility
in each arena3 but different techni5ues tend to have greater usefulness in particular arenas# :or e6ample3
strategic planning is the best method for dealing ith issues that appear in the e6ternal arena#
Eeengineering is ell suited for some macro=internal issues3 and total 5uality management is an
e6cellent method for addressing issues in the micro=internal arena#
I3, /echni4ues o .anagement Innovation
0o effectively apply innovation techni5ues3 e need a shared definition of each techni5ue# 0his section
of the paper describes and assesses a select group of management innovation techni5ues# As noted
earlier3 e ill focus on strategic planning3 reengineering3 total 5uality management3 benchmar1ing3
team management and privati2ation# 4e ill define the techni5ue3 describe ho it or1s3 and discuss
the typical benefits or impacts and costs of using these techni5ues
*, S/5A/EGIC P6A##I#G
DEFINITION:
Iames .ercer3 in his Strategic Planning for Public .anagers observed that: 8At least three decades ago
Peter Druc1er defined planning as actions ta1en right no to reach tomorro9s ob7ectives# @is definition
still holdsF planning means deciding hat has to be done to prepare a given organi2ation for the
future#8 $p# %J' C#4# @offer and D# Schendel define strategy as the basic pattern of current and planned
resource deployments and environmental interactions that indicate ho the organi2ation ill achieve its
Understanding and Applying Innovation Strategies in the Public Sector
ob7ectives# In 0he De Affective Public .anager $Cohen and Aimic1e: %!!,' e observe that:
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8A strategy attempts to delineate the resources that ill be used to pay for specific activities designed to
accomplish specific ob7ectives# Strategy formulation begins ith the identification of ob7ectives and the
determination of methods for reaching ob7ectives# 0hese ob7ectives and activities are then scaled to fit
ithin resource constraints# Aach element of a strategy $ob7ectives3 activities and resources' is
constrained by political3 social3 economic and environmental variables# 0he ob7ectives and activities of
public organi2ations are constrained by the formal authority provided by statute#8 $p# %!"'
HOW IT WORKS:
A strategic planning e6ercise typically involves an organi2ation ide initiative to reformulate goals and
develop ne methods of achieving those goals# At a minimum3 managers from 1ey organi2ational units
are involved in the process# Sometimes participation is broader3 involving staff from throughout the
organi2ation#
De information about the organi2ation9s environment is presented and assessed regarding its impact on
the organi2ation9s goals and activities# .eetings are held to stimulate the creation of ne approaches to
the organi2ation9s mission and or1# An inventory of the organi2ation9s capabilities and needs is also
conducted to determine the organi2ation9s capacity to implement the ne strategy#
BENEFITS:
Strategic planning gives the organi2ation a chance to loo1 at itself comprehensively3 in the light of ne
information# 4hen it is developed by a ne management team3 it provides that team ith an opportunity
to form a cohesive identity# 4hen it is developed by a chief e6ecutive3 independently3 it provides that
e6ecutive ith a medium to e6press and define his or her leadership# 4hen a strategy is developed ith
broader participation it can be used to create a sense of shared mission and values3 and can be used as a
political tool to develop support for organi2ational change# In the public sector3 an organi2ational
strategy can prevent an agency from being ta1en in rapidly shifting directions by the political mantra of
the moment#
COSTS:
A high=5uality strategic planning process re5uires significant e6penditures of management time and
analytic resources# If the analysis is not done ell3 the organi2ation may misread its environment3 or
mis7udge its on capability# 4hile organi2ational change tends to be incremental3 some strategic
planning e6ercises assume that organi2ations are capable of massive3 rapid change#
In the public sector3 an organi2ational strategy can create political difficulties because it not only
indicates hat an organi2ation is planning to do3 it re5uires e6plicit trade=off decisions about hat an
organi2ation ill not do# 0his can stimulate political opposition to the organi2ation3 and stimulate
Understanding and Applying Innovation Strategies in the Public Sector
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publics and interest groups that previously ere unaare that of the organi2ation9s plans#
&, 5EE#GI#EE5I#G
DEFINITION:
Eeengineering is 8the fundamental rethin1ing and radical redesign of business processes to bring about
dramatic improvements in performance38 according to .ichael @ammer and Iames Champy3 authors of
Eeengineering the Corporation: .anifesto for ;usiness Eevolution3 the %!!- boo1 that populari2ed this
innovation strategy $@ammer K Champy3 %!!-3 p# -&'# 0he authors emphasi2e 1ey ords3 particularly
8fundamental83 8radical83 8dramatic83 and 8processes8# 0hey stress 8starting over8 and 8clean sheet of
paper8 as the reengineering ay of thin1ing#
0he authors also focus on hat reengineering 8is not8:
It is not donsi2ingF
It is not restructuringF
It is not a fadF and3
It is not more of the same#
Eeengineering has also become very popular# 0o million copies of the original boo1 are in circulation
and the to authors have each ritten se5uels# According to .ichael @ammer3 reengineering consulting
fees e6ceeded LJ billion in %!!) alone3 driving L-* billion in related corporate investments $@ammer3
%!!,3 p# 6i'#
HOW IT WORKS:
Perhaps to provide the ma6imum opportunity for consulting arrangements3 none of the three boo1s by
the creators of the reengineering movement are very specific about ho a reengineering pro7ect should
be conducted3 step by step# @ammer and Champy are clear that the larger the scale of the pro7ect3 the
higher the probability of success# 0hey are also clear that reengineering is a top=don strategy3 re5uiring
strong and visible commitment from the CA> and communication/enforcement of that commitment
don the organi2ational hierarchy#
In general terms3 reengineering begins ith the appointment of a 8process oner8 by the CA># 0he
process leader then convenes a reengineering team3 ho ill reengineer the process under revie3 ith
the assistance of an internal reengineering 8c2ar8 and a hired3 e6pert reengineering consultant# A
reengineering steering committee can also be established to provide a sounding board# >nce the team
has been assembled and all the aforementioned roles officially designated3 the process can begin#
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Understanding and Applying Innovation Strategies in the Public Sector
4hile each reengineering effort is in many respects uni5ue3 common steps include:
%# .ap the current processF
&# Identify the steps that add valueF
-# Aliminate the steps that don9t add valueF
)# Use a triage mentality3 emphasi2ing speed3 5uic1 turnarounds3 prompt service and a single point of
contact for customers and suppliersF and3
,# Eeengineer first3 then bring in automation and ne information systems technology#
As reengineering has been applied to government3 some uni5uely public concerns must be
accommodated# Also3 the realities of public organi2ational behavior have led to some modifications of
the process# 0o begin ith3 government organi2ations must balance the constitutional re5uirement of due
process in striving to meet consumer demands for prompt service# And hile public organi2ations see1
to include customers in reengineering of public service delivery systems3 they must remain attentive to
the dangers of conflicts of interest and abuses of the public trust#
In his very instructive3 8A ?uide to Eeengineering ?overnment83 Eussell Binden suggests seven
principles to guide reengineering in the public sector:
%# >rgani2e around outcomes3 not functionsF
&# Substitute parallel for se5uential processesF
-# ;ring donstream information upstreamF
)# Capture information once3 at the sourceF
,# Provide a single point of contact for customers and suppliers henever possibleF
"# Ansure continuous flo of the main processF and3
J# :irst reengineer3 then automate#
It is our observation that here reengineering in the private sector virtually alays occurs ithin the
same organi2ational frameor13 government reengineering often involves the transfer of the process
being changed from its current organi2ation to a different3 e6isting agency or3 more often3 for it to be
Understanding and Applying Innovation Strategies in the Public Sector
reestablished as a free=standing3 ne agency# 4hile many re=organi2ations are more symbolic than real3
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very often the creation of a ne public sector organi2ation is used as a ay to reengineer a set of basic
organi2ational processes#
BENEFITS:
@ammer and Champy3 together and separately3 cite a long list of testimonial case studies to document
the efficacy of reengineering3 including I;.3 :ord3 <oda13 @allmar13 0aco ;ell3 Capital @olding and
;ell Atlantic# Eeengineering proponents identify increased productivity3 groth3 employee
empoerment3 higher morale3 loer overhead and improved customer service as benefits of the process#
Its advocates also maintain that reengineering enables organi2ations to adapt to meet the needs of
customers and the demands of competition and change# 0hey argue it recogni2es the permanence of
change and constructs a model of supportive competitiveness and groth ith service# .oreover3 it
refocuses the organi2ation on its vision and purpose#
COSTS:
Eeengineering is a high cost and high ris1 strategy# A6pensive outside consultant fees are only the
beginning# 0he fear and subse5uent dislocation caused by 8blan1 sheet8 analysis disrupts both efficient
e6isting processes as ell as those in need of immediate improvement# 0he organi2ation9s functioning
during the transition period is disrupted and sloed#
Despite the denials of its true believers3 reengineering has become a cover for large scale donsi2ings
and purging of analysts and middle managers# As a bi=product3 many of the organi2ation9s best people
$ho the organi2ation does not ant to lose' leave before the e6pected blood=letting starts# And3 hile
supporters also claim it is 8not restructuring83 the costly and time=consuming process of shuffling the
organi2ational bo6es often accompanies the reengineering e6ercise3 particularly in the public sector#
Eeengineering9s laudable emphasis on holism and seamlessness is also a limiting factor# Putting
everything on the table can be daunting and can raise opposition from every corner of the organi2ation#
.oreover3 hile competition and change3 technological and otherise3 march forard daily3 a
reengineering revolution ta1es about a year to accomplish# And3 is it feasible3 in any organi2ation3 to
have annual revolutionH
In the public sector3 government operations are generally not disciplined by competitive mar1ets#
Ideally3 public sector reengineering ould be accomplished through consensus and universal
participation# ;ut3 the non=stop public and media pressure to cut the cost and si2e of government 7ust
about guarantees that public sector reengineering becomes a closed3 pre=destined donsi2ing e6ercise#
Eadical redesign in the public sector is also severely constrained by partisan differences regarding
government9s mission3 short=run considerations driven by the ne6t election3 legislative mandates3 policy
differences beteen the legislative and e6ecutive branches3 civil service restrictions3 and the opposition
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of public employee unions# Dor are the resources often available in the public sector for reengineering
consultants or the e5uipment and information technology needed to implement the recommended
process changes# :inally3 a great deal of cynicism has built up in public sector bureaucracies about the
ne6t innovation 8silver bullet8# Bong term middle managers have seen PP;S3 Mero=based ;udgeting3
.;>3 0G. and Eeinvention directives come and go ith the ne6t election or change of commissioner#
Protected by civil service3 many of these middle and higher public sector managers ill ait out or even
clandestinely sabotage the reengineering effort# 0hat is hy e believe that the transfer of the process to
be reengineered3 either to an e6isting3 or an entirely ne agency is the most li1ely ay for reengineering
to succeed in the public sector#
), /7.
DEFINITION:
0otal Guality .anagement can be reduced to three central elements $Cohen and ;rand: %!!-':
%# Collaboration ith suppliers to ensure that the supplies utili2ed in or1 processes are ell designed
and fit for use#
&# Continuous employee analysis of or1 processes to improve their functioning and reduce process
variation#
-# Close communication ith customers to identify and understand hat they ant and ho they define
5uality#
HOW IT WORKS:
4e have developed a government=oriented adaptation of 0G. that e call pro7ect=oriented 0G.# It
includes the folloing elements:
1. A focus on production in th fi!d.
.anagement and or1ers should focus their attention on the process of producing goods and services#
Understanding e6actly hat happens hen or1 is performed is an essential element of 0G.# Guality
can only be improved once management and or1ers have completed a step=by=step description and
analysis of the or1 process#
". Wor#r p$rticip$tion.
In order to increase the level of attention paid to production3 management must depend on or1ers to
analy2e and suggest improvements to or1 processes# Since or1ers perform these tas1s3 only they have
access to all the information about ho or1 gets done# If management does not obtain this information3
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Understanding and Applying Innovation Strategies in the Public Sector
it is very difficult to improve 5uality#
%. Co&&unic$tion 'ith custo&rs $nd supp!irs.
In order to improve 5uality3 a or1er must have supplies that are ell designed and fit for use# Supplies
can include computer e5uipment3 forms3 or directions from a supervisor# If 5uality is to be improved3
suppliers must learn ho to tailor their supplies to the needs of particular production processes#
Similarly3 in order to determine hat customers ant and ho customers define 5uality3 an organi2ation
must constantly be learning their customers9 preferences#
(. R$pid ch$n)s in st$nd$rd opr$tin) procdurs $nd const$nt tr$inin).
0G. re5uires that organi2ations constantly analy2e and change or1 processes# Continuous
improvement re5uires continuous modification of standard operating procedures and the communication
of those ne processes throughout the organi2ation#
*. S&$!!+sc$! pro,cts $t th -)innin).
0o teach or1ers ho to communicate ith suppliers and customers and analy2e their on or1
processes it is best to start ith small3 easy=to=understand aspects of the organi2ation9s daily or1# 0his
builds a record of visible accomplishments 5uic1ly and avoids misinterpreting boundary disputes as
0G. failures#
.. E/ntu$! in/isi-i!it0.
After a fe years 0G. is simply 8the ay e or1 around here#8
1. 2ti!i3in) 4istin) dp$rt&nt$! procdurs $nd structurs $s $ found$tion. Eeinforce the importance
of 0G. through routine management processes# Avoid establishing separate 5uality organi2ations to
implement 5uality improvement pro7ects#
BENEFITS:
0G. can enable an organi2ation to tap into 1noledge about or1 processes possessed only by
or1ers# It can empoer staff to thin1 and can enhance morale# It can result in higher 5uality and loer
cost production as or1 steps are rationali2ed and supplies are improved# It can provide a means for
bringing customer preferences into an organi2ation3 increasing the organi2ation9s ability to deliver hat
their customers ant#
COSTS:
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Understanding and Applying Innovation Strategies in the Public Sector
If the organi2ation9s overall strategy is faulty3 0G. ill have the effect of improving production of the
rong thing# :urthermore3 if standard private sector 0G. is applied unmodified in government3 too
much ill be tried too soon and the effort ill probably fail# Pro7ect=oriented 0G. is public=sector
oriented and recogni2es the fact that government organi2ations are characteri2ed by independent poer
bases# 0he leaders of these poerful independent units must be recruited to 0G.# 0hey cannot be
forced to comply# If these middle managers do not support 0G.3 they ill simply ait out the transitory
elected and appointed officials championing the initiative and 1ill it at the first opportunity# ;ecause it is
so difficult to fire these managers3 they cannot be sept aside by the top=level leadership as called for by
Deming in his version of 0G.#
Another cost of 0G. in the public sector has to do ith the difficulty of reconciling the claims of
competing or contradictory customer demands# Unli1e the private sector3 the government cannot simply
decide it only intends to serve a mar1et niche# :urthermore3 sometimes the people ho supply the
resources for a service are not the direct users of the service# 0his means you ill have one set of
customers paying and another set of customers receiving a particular service# :or e6ample3 8ta6payers8
pay for elfare programs but elfare recipients $ho may or may not be ta6payers' actually use elfare
services#
8, BE#C9.A5:I#G
DEFINITION:
;enchmar1ing involves finding3 adapting and implementing best practices# ;ruder and ?rey define it as
8a rigorous yet practical process for measuring your organi2ation9s performance and processes against
those of best=in=class organi2ations3 both public and private3 and then using this analysis to improve
services3 operations and cost position dramatically#8$;ruder and ?rey3 %!!)F p# S=!'# E#I# :ischer defines
benchmar1ing in performance measurement terms: 80hrough a series of performance measures==
standards 1non as 8benchmar1s8==a person can identify the best in a class among those doing a
particular tas1# 0hen3 the best practices are analy2ed and adapted for use by others anting to improve
their on ay of doing things#8$:ischer3 %!!)F p# S=-'
HOW IT WORKS:
;enchmar1ing as a stand alone management strategy is a relatively ne and evolving set of techni5ues#
Its roots go bac1 to performance measurement3 including the IC.A ground=brea1ing efforts to measure
municipal activities in %!-+3 through Deming and his folloers3 the @oover Commissions3 and PP;S# In
its current form3 ;ruder and ?rey $%!!)F pp# S=!=S=%)' have set out the most detailed agenda3 the
folloing seven step protocol:
%# Determine hich function ill benefit most from benchmar1ingF
&# Identify 1ey cost3 5uality and efficiency measures for those functionsF
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Understanding and Applying Innovation Strategies in the Public Sector
-# Conduct an e6pert opinion survey and literature revie to find the best in class organi2ation for each
measureF
)# .easure the best in class performance in the 1ey areas identifiedF
,# Compare your organi2ation9s performance against the best in class and 5uantify the gapF
"# Specify actions to close the performance gap to best in class and3 if possible3 the steps necessary to
8leap=frog8 the current industry leaderF and3
J# Implement those actions and monitor your performance#
BENEFITS:
;y continuously see1ing to identify the best=in=class and duplicate or surpass their performance3 an
organi2ation can embed in its culture and behavior a strong spirit of competitiveness3 pride3 confidence3
energy and striving for improvement# ;enchmar1ing is also a relatively lo tech3 lo cost and 5uic1
response techni5ue that almost any organi2ation can adopt# ;enchmar1ing also seems to be common
sense and is easily understood by managers3 or1ers3 suppliers3 customers3 the general public and the
media#
COSTS:
;enchmar1ing can easily become bogged don in performance measurement and lose sight of the real
ob7ective of performance improvement# 0his is particularly significant as measuring the performance of
organi2ations3 particularly public organi2ations ith multiple goals3 is often a very difficult tas1# As
:ischer suggests==no data are ever perfectF small differences should not be considered overly
meaningfulF and comparisons ith competitors should be used to find red flags# $:ischer3 %!!)F p# S=,'#
Sometimes3 significant factors may be too difficult or even impossible to 5uantify $eg#3 spirit3 energy or
attitude'#
;enchmar1ing can lead to limits on creativity by focusing on copying hat already has been achieved3
instead of encouraging 8out of the bo68 thin1ing and loo1ing for 5uantum brea1=throughs# And it can
become a ceiling on achievement in a given field# It can also lead to blind attempts to imitate hen more
careful analysis ould relieve cultural3 temporal3 geographic or other characteristics that limit the
replicability of the selected benchmar1#
:inally3 the cost of benchmar1ing is seldom noted in the literature or considered in the field# Eesearch
ta1es time3 energy and resources# 0he more e6tensive the benchmar1ing effort3 the more li1ely it is to
consume the organi2ation9s innovative capacity# 0a1en to an e6treme and combined ith a comple6
performance measurement system to establish baselines3 benchmar1ing can begin to negatively affect
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the 5uality and 5uantity of services delivered#
!, /EA. .A#AGE.E#/
DEFINITION:
In a or1place conte6t3 a team is a group of people pooling their s1ills3 talents and 1noledge in a
mutually supportive effort to complete a pro7ect3 reach a goal or solve a problem# >r3 a team can be
defined as a group of people dran from different disciplines3 ho or1 together on a permanent basis
to carry out critical organi2ational tas1s# Similarly3 in their very successful3 0he 4isdom of 0eams:
Creating the @igh=Performance >rgani2ation3 Ion <at2enbach and Douglas Smith define teams as 8a
small number of people ith complementary s1ills ho are committed to a common purpose3
performance goals3 and approach for hich they hold themselves mutually accountable#8$<at2enbach
and Smith3 %!!-F p# ),'
In modern organi2ations3 pro7ect teams are rapidly becoming the primary mechanisms for innovation
and change# 0he team focus can have a dramatic impact on the roles of managers and subordinates and
on the functioning of an organi2ation# 0he team focus can shift an organi2ation from managing by
control to managing by commitment# It can change the institution9s emphasis from individual motivation
and output to team motivation and outputF from traditional functions of organi2ing3 staffing3 and
evaluating to coaching and facilitating#
HOW IT WORKS:
0eams are typically comprised of five to seven members3 ith one member selected by senior
management to serve as the team leader# 0eams are often created to complete a specific pro7ect or goal
or to perform a significant on=going function# 0he creation of a team is generally an indication from
senior management that the or1 of the team is an organi2ational priority# 0eams are usually organi2ed
as standing teams3 pro7ect teams or crisis teams#
Standing 0eams= Certain pro7ects3 types of pro7ects3 customers or issues fre5uently recur ithin an
organi2ation# Standing teams can deal ith issues that resurface seasonally or ith issues for hich a
group of specialists is the most effective response# Unli1e pro7ect teams3 standing teams e6tend beyond
the scope of any one pro7ect and can be characteri2ed as a permanent part of the organi2ation#
Pro7ect teams= Assembled for a specific assignment3 this is the most common type of team and is typical
in consulting organi2ations# 0he appropriate mi6 of specialists from across the permanent organi2ation
are brought together to accomplish a pro7ect ith clearly defined goals and deadlines# >nce the pro7ect is
accomplished3 the team members return to their home base or 7oin another team directed at a different
set of ob7ectives# A typical pro7ect for such a team might be the installation of a ne computer system3
relocating the office or setting up a ne program#
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Crisis 0eams= 0he nature of a crisis team is obvious from its name# 0he typical governmental
organi2ation roc1s from side to side as a herd of staffers run from crisis to crisis identified by
head5uarters3 the 4hite @ouse3 Congress or the media# Crisis teams can be used to mitigate the constant
disruption of the agency9s regular or1 $hich can later become a crisis hen it doesn9t get done'# Crisis
teams can be organi2ed as pro7ect teams3 assembling a ne team of e6perts to deal ith a specific crisis
or the standing team concept3 a on=going sat team could be used# ?enerally3 these pro7ects ould be
very high profile and selection for participation on a crisis team should be accorded the proper
organi2ational prestige#
Clear ground rules are essential to team success# 0eam members must understand the or1 they are to
accomplish# 0here should also be a formal reporting structure and schedule for teams to input their
activities into the organi2ation9s management structure# 0here should also be regular3 formal feedbac1 to
the team from management on their activities and a method of evaluating team performance and the
contribution of each team member to that overall performance#
?round rules for each team should be established3 in riting# Among the issues covered should be a
process for assigning or13 methods for revieing or13 the role of the team leader3 an evaluation
process for team and individual performance3 and procedures for resolving conflicts beteen the team
and other organi2ational units#
Some organi2ations e6ecute an annual 8contract8 detailing the specific deliverables that the team is
e6pected to produce over the course of the year# It is particularly important that staff be provided ith
increased levels of specificity and certainty in their communication ith management since the volume
of communication ill necessarily be reduced under the ne management structure#
Clear goals3 clear roles3 constant and open communication3 a plan of action and ell established ground
rules are essential# In addition3 training in beneficial team behaviors and constructive feedbac13 balanced
participation3 informality3 listening3 civili2ed disagreement3 1noledge of group behavior3 self=
assessment3 style diversity3 and ell defined decision=ma1ing processes all contribute to a successful
team#
BENEFITS:
A team approach to the accomplishment of or1 assignments has been common in many cultures for
hundreds of years# Barge multi=national corporations have been using the team approach for a groing
percentage of their or1 since the beginning of the decade# 0he team approach is prominent and credited
ith much of the success at leading corporations such as .otorola3 :ord3 -. and ?eneral Alectric#
0eams perform ell because they bring together people ith complementary s1ills and e6periences that
e6ceed the capacity of any one of the members or of the members collectively but or1ing
independently# 0he broad base of teams enables them to respond ell to a ide variety of challenges
from customers3 change and technological innovation#
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Second3 the communication s1ills and netor1 that successful teams develop creates a capacity to
respond 5uic1ly and fle6ibly to ne problems and a changing environment# Individuals seldom have the
resources in time3 s1ills and attitude to adapt to change or ne obstacles as rapidly or effectively#
0eams also facilitate the brea1ing don of barriers beteen genders3 age groups3 races3 ethnic groups
and geographic biases# 4ith such barriers reduced3 an environment of greater trust and mutual
confidence develops3 as ell as a stronger commitment to organi2ational goals#
:inally3 advocates argue that teams have more fun# 0his 1ind of fun is important because it comes out of
meeting and or1ing together to solve important organi2ational problems or in striving to meet
organi2ational goals# 0eams or1 long3 hard and ell in part because the members en7oy the process of
collaboration and achievement# 0hey often celebrate their successes and discuss their failures together3
hich reinforces the social and positive or1 aspects of the team e6perience# <at2enbach and Smith cite
the phenomenon of being part of something greater than 7ust yourself# $<at2enbach K Smith3 %!!-F p#
%!'#
COSTS:
A lac1 of conviction from management can communicate to the organi2ation9s members that or1 in
teams is not serious business but more of a human resources3 spirit=building e6ercise# 0his ill reinforce
the pre7udice of some that individual performance is the only thing that counts and that or1 in teams
7ust astes time in meetings and tal1ing hen real or1 could be getting done# In such circumstances3
time spent in teams ill be asted time#
A6cept for athletes3 most of our formative e6periences in school and social organi2ations reinforce
individual or1 and evaluation# It is not surprising then3 that many people feel at ris1 and uncomfortable
hen the team structure is introduced into their or1 setting#
0he problem becomes e6treme hen the performance evaluation system and compensation systems are
not modified and therefore reard only individual achievement# .ost members receive the clear signal
that or1 in teams is not important# 0his reard problem is compounded hen promotions are tied to
progress up the supervisory ladder of the traditional bureaucracy# In such circumstances3 e6pending time
and energy in team settings is at best a aste and could even damage your prospects for a future in
management#
0eams inevitably face obstacles hich3 if not overcome3 can aste the organi2ation9s resources3 hamper
morale and ultimately lead to the organi2ation9s demise# 0o prepare individuals for effective team
performance3 initial training and on=going access to help and advice is critical# Internal or hired
consultants are used but in either case3 there is an on=going e6pense involved#
It is even more e6pensive but as important to revise the organi2ation9s performance evaluation and
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Understanding and Applying Innovation Strategies in the Public Sector
compensation system to reflect and reard performance in team settings# Career ladders must be created
to ma1e sure that talented employees do not come to vie team assignments are a career dead=end#
0here also must be clear guidelines regarding ne6t assignments hen a team completes its or1 and is
disbanded#
:inally3 moving to team management is a reorgani2ation and thereby includes the dislocation and
e6pense of a more traditional organi2ation# Some ill resist the change and others ill see1 to
undermine it# Iob descriptions3 career ladders3 evaluation systems and often office configurations ill
need to be revised# And3 there is alays the danger that the performance improvements anticipated by
management ill not meet e6pectations3 and the costs of another reorgani2ation ill follo#
+, P5I3A/I;A/I-#
DEFINITION:
Utili2ing private3 or non=governmental organi2ations in the implementation of public policy3 often
replacing direct government provision of particular programs or services#
@>4 I0 4>E<S:
Privati2ation ta1es four different forms# 0he first is contracting out functions that government agencies
used to implement ith their on staff# .anagement control is still retained by government3 and the
option of ending a contract and resuming direct government control is retained# 0he second form of
privati2ation involves turning over a government=run enterprise such as a phone system to the private
sector3 by selling government assets and monopolies to private firms# 0he third form of privati2ation is a
public=private partnership3 here government and the private sector or1 7ointly3 ith clearly defined
roles3 on a public purpose# De Cor1 City9s ;usiness Improvement Districts are an e6ample of such a
partnership# Under this model3 the businesses located ithin a specific geographic area vote to create an
organi2ation to provide additional services such as security3 clean=up3 maintenance and mar1eting and in
return they agree to levy a ta6 assessment on themselves# 0he city collects these fees as part of the
normal ta6ation process and returns the fees to the ;usiness Improvement District organi2ation# 0he
forth form of privati2ation is public policy designed to encourage private behavior# 0his type of
leveraging public resources to encourage private activity typically involves ta6 policy such as targeted
credits or deductions3 or deregulation# :ederal home mortgage insurance and subsidi2ed flood insurance
are e6amples of this leverage approach#
BENEFITS:
0he issue of privati2ation often appears along ith a great deal of ideological baggage about the relative
value and competence of the government and the private sector# .any of its most ardent supporters
believe that smaller government is a benefit in and of itself# 4e believe that the decision to privati2e
should be analy2ed ithout a preconceived notion that it is the better ay until proved otherise# In our
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vie3 the chief benefit of privati2ation is that it opens up the possibility of competition in the
performance of a public function# 0his is not to say that competition is a cure all# 0here are some
instances hen competition is not possible or desirable# @oever3 in many cases higher 5uality3 less
e6pensive services and programs can be delivered hen organi2ations compete for the business and
customer choice can be ma6imi2ed#
Another benefit of privati2ation is that it facilitates organi2ational differentiation and focus# It allos
governmental policyma1ers the freedom to achieve the >sborne and ?aebler dictum to steer rather than
ro# It enables public managers to focus on policy design and program evaluation3 and allo others to
orry about the direct administration of governmental programs#
COSTS:
0he principal costs of privati2ation stem from the loss of direct control over program administration# 0he
production of goods and services needed to implement public policy is no longer in the hands of
government# If one private entity develops monopoly control of a service3 or dominates that industry and
holds a 5uasi=monopoly3 government9s ability to influence program implementation may be
compromised# 0he s1ills and 1noledge gained through administration belong to the private firm and
not the government# ?overnment may come to lac1 the technical e6pertise or 1noledge base to
effectively manage their private partners#
Conceptually program implementation and policy formulation are interconnected# Policy design must
account for organi2ational capacity# Affective program implementation re5uires a 1noledge of
administrative issues and the ability to influence administrative behavior# A reduced understanding of
administrative issues and reduced leverage over implementation behaviors is a cost of privati2ation#
3, Integrating and Using /echni4ues o Public .anagement Innovation
In our vie3 all organi2ational innovation must begin ith a strategy# 4ithout organi2ational consensus
on its mission and a road map for achieving its 1ey ob7ectives3 better management has no meaning# A
more efficient or economical method of producing a product or service fe people desire is hardly orth
the effort# So3 for us3 all management innovation initiatives must begin ith strategic planning# 4ith
the organi2ation9s mission and 1ey ob7ectives articulated and agreed upon3 the most effective method$s'
to achieve them can then be selected#
5eengineering is a macro=internal strategy that is both comprehensive and e6pensive# It implies that the
organi2ation is still a viable vehicle to achieve its ob7ectives but it needs a radical restructuring of its
methods# Eeengineering has or1ed ell in both the public and private sectors but it is a high=ris1
option3 re5uiring strong leadership at the top3 e6tensive resources and the time to succeed# 0o us3 it is
inconceivable that an organi2ation ould go forard ith a reengineering pro7ect ithout first engaging
in a serious3 thoughtful strategic planning process#
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In addition3 some of the costs of reengineering could be mitigated by combining and/or setting the
organi2ational stage ith some of the other innovation techni5ues e have discussed# 0he fear of
reengineering3 particularly due to its top=don philosophy and association ith donsi2ing could be
offset by ensuring the ma6imum feasible participation of the staff in the planning stage# A
benchmarking e6ercise3 involving a ide array of organi2ational units could identify successful
reengineering programs not re5uiring massive donsi2ing and in the process help create staff buy=in to
the effort#
4e also believe that mature /7. organi2ations are better prepared for a reengineering effort ith
several years of staff involvement in analy2ing their or13 thin1ing in a continuous improvement mode
and seeing or1 as a continuum from supplier through the organi2ation to customers# A level of trust
and cooperation beteen management and or1ers that evolves from a successful 0G. effort ould
help enormously in achieving support for the reengineering effort#
It has become very popular to critici2e /7. in the US recently# 0he supposed 8failures8 of 0G. are
often the failures of half=hearted histle and bell consultant e6ercises that are not integrated into the
regular or1 organi2ation or are the inadvertent prelude to a massive donsi2ing initiative# 4e have
seen and participated in successful 0G. initiatives in organi2ations large and small3 public and private3
groing and stable# ;ut as e have discussed3 0G. has a greater chance of getting off to a successful
start if it is pro7ect=based#
0G. provides an e6cellent foundation for other innovation strategies3 as it can and should invite
participation from all levels of the organi2ation3 encourages every member of the organi2ation to thin1
about their or1 in the conte6t of continuous improvement and establishes the frameor1 of supplier=
organi2ation=customer# 4hile 0G. can move an organi2ation forard3 if an organi2ation9s basic
systems are inade5uate3 the 0G. improvements ill tend to 8bounce against8 those ineffective systems#
It is at this point and in this ay that 0G. helps identify fruitful targets for reengineering#
Benchmarking should be a part of any effort to innovate ithin an organi2ation# It is useful in strategic
planning3 0G.3 reengineering and even privati2ation# As each organi2ation establishes its on
innovation plan of action3 it is usually instructive to learn ho other organi2ations have approached
changing similar processes $/7.' or systems $5eengineering'# It is also helpful in defining your
mission or in setting ob7ectives to 1no ho similar organi2ations have completed that e6ercise# >r to
bring team management into your shop3 ouldn9t you ant to 1no ho the organi2ation9s noted for
their effective teams has made their system or1H
;enchmar1ing can also stimulate imaginative thin1ing# It can help overcome the s1epticism3 particularly
in government organi2ations3 that the innovation strategy beginning planned is 7ust another management
8fad8 by presenting concrete models of success# ;ut benchmar1ing ithout a management strategy to
implement the desired innovation/ improvement is a meaningless and asteful e6ercise#
/eam management can be a stand alone innovation techni5ue that can help facilitate cooperation and
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coordination among organi2ational members3 cope ith donsi2ing and/or help flatten the
organi2ational hierarchy# It reflects Druc1er9s observation that most organi2ations are increasingly
populated by highly educated3 highly s1illed 1noledge or1ers ho are capable and more interested in
or1ing together to achieve shared ob7ectives than being told hat to do# 0eam management is also an
essential component of any successful /7. initiative# 4ithout a commitment and ability to or1 in
teams3 0G. innovation is impossible#
Similar to the other innovation techni5ues discussed in this paper3 an effective team management
structure is rather meaningless ithout a clear mission and organi2ational consensus around 1ey
ob7ectives# And3 similar to 0G.3 team management can 8bounce against8 fundamental systems that do
not or1# In such circumstances3 to achieve sustainable improvement3 a team management innovation
must be combined ith either reengineering or some form of privati2ation#
Privati<ation ma1es sense only after the organi2ation has gone through a strategy planning process to
determine hat it is about# 0he core functions essential to the organi2ation9s reason for being are the
activities it can and should do itself# :unctions that need to be performed but are not central to the
organi2ation9s definition of self can be privati2ed# :or e6ample3 the US Anvironmental Protection
Agency9s$APA' Superfund to6ic aste clean=up program contracts ith private organi2ations for the
clean=up of aste sites# Do APA staff actually perform clean=up or1# >n the other hand3 decisions
about here clean=up or1ers are assigned and ho clean a site needs to be are made by APA staffers#
0his allocation of or1 tells us hat is central to APA9s mission and hat is not#
It is essential for an effective organi2ation to have a clearly defined focus# >nce this is determined3 the
organi2ation should strive to shed functions that are not central# 0o do higher 5uality3 more cost
effective or13 an organi2ation must focus its resources on those functions central to its e6istence and
shed or contract out secondary functions# 0oo often3 the basis for privati2ation is not such a strategic
planning e6ercise3 but rather a matter of e6pediency to raise immediate cash for budget=balancing3
escape criticism for poor performance3 or fit into a blind commitment to the philosophy that the mar1et
cures all ills#
In sum3 e see privati2ation as an alternative to internal management innovation that can be an effective
tool3 if used thoughtfully and for the right reasons#
3I, Conclusion
4e rote /he #e= Eective Public .anager because e remain convinced that the public sector can
not only or1 ell but that an effective public sector is essential to a healthy3 thriving society# ;ut e
also believe that much has been learned regarding management over the past decadeF particularly3 hile
e still believe an effective public manager must be an e6pert in or1ing around constraints3 e also
believe e need to or1 harder at removing constraints# Sometimes it is better to attac1 and eliminate an
outmoded process than to aste resources or1ing around it#
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Understanding and Applying Innovation Strategies in the Public Sector
Strategic planning3 reengineering3 0G.3 benchmar1ing and team management are viable innovation
techni5ues3 especially hen used in combination ith each other to help public managers ma1e public
organi2ations the effective organi2ations they need to be3 if modern society is to survive and prosper#
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Understanding and Applying Innovation Strategies in the Public Sector
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;ac1 to Personal @omepage
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